Prices of Rare Cigars Skyrocket at a Christie's Auction in London

Where There is Smoke There is Fire

Just after Thomas Bohrer bought the last lot in the May 20 cigar auction at Christie's in London--a box of 50 Cuban Diplomatic Trinidads for $8,000--he turned and said to a friend: "This is just the beginning. Prices are not going to go down. They are going to keep going up like fine wines. These are cigars that people will never see again. So, they are worth the high prices."

Bohrer, who flew from Hong Kong especially for the sale, bought about 15 percent of the nearly 250 lots of cigars auctioned at the sale. He bought just about every category of smoke, from a cabinet of 50 Davidoff Chateau Mouton-Rothschilds from the mid-1980s for about $7,300 (converted from the British pound) to a box of 25 corona-sized La Corona Prince of Wales from the 1930s for about $1,800. All the cigars he bought will be added to his already impressive sales catalog for his Hong Kong company, Habanos Holdings, which specializes in trading in hard-to-find cigars for private customers located primarily in the Far East.

The total of the Christie's cigar sale eclipsed $500,000--a record for a commercial cigar auction. Buyers and sellers came from all over the world, in addition to hundreds of commissioned bids and telephone bids during the sale. One of the biggest buyers was an anonymous bidder from the United Kingdom, whose purchases included a box of 25 Davidoff Dom Perignons for about $9,000, and 20 Davidoff 80th Aniversarios for close to $8,800. An anonymous U.S. buyer seemed to have an affinity for the torpedo-styled Montecristo No. 2s, buying four boxes from 1973 for about $2,600 apiece, as well as a box from 1949 for about $8,100.

"I am amazed by the turnout," said Edward Sahakian, the well-known owner of the London Davidoff cigar shop a few minutes walk from Christie's. He sat through the sale but didn't buy anything due to the high bids. "I am also in a state of shock over the prices."

Only the third major commercial cigar auction ever (two with Christie's in London and one with Sotheby's in Zurich), the May 20 sale may be remembered as a benchmark for fine and rare cigars. It should firmly establish an after-purchase market for cigars, similar to the trade in art, antiques and fine wines. "It has definitely set values for aged cigars," said Simon Chase, marketing director for Hunters & Frankau, the U.K. agent for Cuban cigars. "Sure, it was the buzz and excitement of the sale that helped set these prices, but it was a confirmation of the quality of mature Cuban cigars. It also shows that there is now an investment benefit to cigars."

Until recently, aged cigars--mostly old Cuban cigars--were either traded privately among cigar collectors or sold in charity auctions in Europe and in North America. The auctioned cigars were primarily what aficionados call pre-embargo, meaning they were made in Cuba before the U.S. government imposed an economic embargo against the island in 1962. (The term pre-Castro is often used interchangeably, though technically the designation excludes cigars made after Castro seized power in 1959.) These cigars occasionally sold for hundreds of dollars apiece, although no one was sure whether such high prices were paid for their rarity or for the charity involved.

Selling cigars is nothing new for auction houses in England. Some houses offer cigars in their wine auctions, usually as a service to someone who is selling their wines. In December 1994 in Zurich, Sotheby's, with the help of Geneva cigar merchant Gerard Pere et Fils, auctioned more than 100 cigar lots during a wine sale. (The U.S.-owned Sotheby's has dropped plans for further sales since its directors wish to avoid running afoul of embargo laws.) In a major departure in December 1997, Christie's offered close to two dozen cigar lots in its Finest and Rarest Wine sale instead of its secondary sale in South Kensington, London. Prices were high for a number of cigars in the sale, including a box of 25 pre-embargo Montecristo No. 2s that sold for about $6,600, but they were nowhere near this spring's exorbitant prices.

With Sotheby's on the cigar sidelines, Christie's for the moment has a monopoly on cigar auctions. "Christie's has been selling cigars for 100 years, but we have never had such a large selection of cigars as today. This is the first of many cigar auctions Christie's will do," said Christopher Burr, director of Christie's international wine department, during a post-auction fine wine and cigar bash held at the neoclassical palace of Spencer House. "I am hugely excited by the results."

It's not only good public relations selling cigars. It's good money. Christie's not only makes 10 percent from the buyer of the cigars, but usually another 10 percent from the seller. Brian Ebbesen, also with Christie's wine department and a keen cigar smoker, believes that a steady supply of rare cigars still exists in the market, although perhaps at a lesser scale than fine wines. He plans to have one or two major cigar sales per year. "I am already receiving calls from people offering me various cigars," he said. "I have been offered everything from currently available Cohibas to perfectos from last century."

If May's auction is any indication, Cuban Davidoffs and Dunhills are the most popular rare smokes. These brands haven't been made in Cuba since 1990, and they are becoming extremely difficult to find. Nearly all of those lots in May's sale sold for two or three times Christie's estimates. A box of 25 Chateau Latour Davidoffs brought about $3,800, nearly three times the estimated price. Twenty-five Davidoff No. 2s sold for just over $1,800; the estimate was $740. A half dozen boxes of 25 Dunhill Cabinettas robustos sold at about $4,600 each, more than double the anticipated $1,980 per box.

Cohiba also held its own. Three boxes of 25 Coronas--a Cohiba size last made in the early 1990s--sold for approximately $4,125 each. Even more recent Cohibas drew a premium. A 1995 box of 25 Cohiba Lanceros sold for nearly $760. A box of the same Lanceros is currently available in U.K. cigar shops for $660. "This shows that people are more prepared to pay a premium for aged cigars, even if they are only two or three years older than what is currently available on the market," says Desmond Sautter, the owner of Sautter's cigar shop in London and an expert on aged cigars.

An American at the sale who bought plenty of cigars for smoking during his trips to Europe confirmed Sautter's views. "You just can't find in the market Cohibas or other top cigars such as Hoyo [de Monterrey] Double Coronas with a few years of age," says Jack Kellman, a businessman from Chicago. "I really enjoy smoking cigars with three, four or five years of age. And this is what I am buying at the sale."

This may be why many of the pre-Castro cigars from the 1950s did not fetch the high prices that were anticipated. A partial box of 18 Ramon Allones de Luxes No. 1 sold for about $550, $150 less than estimate. "Real cigar aficionados know that the pre-Castro cigars are usually not that good to smoke," says Kellman. "They are more interested in buying and smoking things that they have heard about but have never had the chance to smoke and they know that they smoke well."

A number of limited-production commemorative humidors from different events held in Cuba over the past six years were also sold at the bottom end of their estimated prices. This suggests that the demand for these boxes of cigars is slowing. For instance, two 1492 humidors, produced by the Cubans to celebrate the 500th anniversary of Columbus, sold for $13,000 apiece; a year ago they were worth $23,000.

This said, very old cigars in the sale fetched surprisingly high prices, considering most are unsmokable. A single giant H. Upmann perfecto from the 1920s in a wood box went for close to $500. A box of 50 small figurado La Flor de Henry Clay Dalias from 1890 sold for about $9,075. "Even if you can't smoke them, these cigars are collectible," said Bohrer. "Serious cigar lovers want to have them as part of their collection."

The boon in old and rare cigars is benefiting those who are willing to sell their smokes. Many were originally obtained for a fraction of their current value. For instance, a box of Don Pablo Ambassadores perfectos, circa 1930, that sold for about $1,800 was bought for $50 a few years ago. A box of Montecristo No.2s from 1875, a gift from an old woman to some builders for remodeling her kitchen, sold for nearly $7,850.

Most of the Dunhills in the sale came from the collection of a foreign exchange dealer from Hanover, Germany. He walked away with tens of thousands of dollars, after selling dozens of boxes of Cohibas and Dunhills. "I bought these cigars just two or three years ago for one-tenth the price," he said. "But I never bought them with the idea of reselling them. I wanted to smoke them. But now with the prices being what they are, it was just too tempting not to sell them."